Breaking Down the Barriers to Sourcing Services in the A&D Industry
Over the last few years, the Aerospace and Defense (A&D) industry has undergone some significant changes; however, its procurement services have not kept pace with development.
While other industries have adopted new approaches to reduce costs — and been handsomely rewarded — procurement at many A&D companies remains tied to the past, driven by a program-centric, cost-plus mentality as well as other traditional business practices that are no longer relevant.
Barriers including complexity improvement initiatives, fragmented and poor spend categorization can prevent A&D companies from getting sufficient insight into their services spending. Without that insight, it's hard to improve the procurement process and negotiate better deals.
In order to meet these challenges, A&D companies must find new ways to reduce costs. Procurement practices that were acceptable a few years ago simply aren’t good enough today.
The good news is that the challenges associated with services sourcing — although seemingly overwhelming — are actually quite manageable.
Deloitte Consulting LLP’s latest report, “Breaking Down the Barriers to Sourcing Services in the A&D Industry: Unlocking the Tremendous Savings Potential in Services Spend,” examines the unique challenges of sourcing services and describes a robust approach for A&D companies to save money and get more value from their services investment. We believe there are five steps A&D companies should consider in their efforts to reduce their service costs while improving overall service, including:
- Establish spend categories
- Deploy process and tools for categorized spend
- Re-categorize legacy data and source quick hit categories
- Prioritize category sourcing in multiple waves
- Customize sourcing strategies and source categories
Read the full report attached below in PDF format to learn more.